The European Central Bank said on Thursday (8 July) that it would further incorporate climate change considerations into its monetary policy, including on disclosure, risk assessment, and decisions on collateral and corporate sector asset purchases.
“Looking ahead, the ECB will adjust the framework guiding the allocation of corporate bond purchases to incorporate climate change criteria, in line with its mandate,” it said, as it announced the results of a long-awaited strategic review.
“These will include the alignment of issuers with, at a minimum, EU legislation implementing the Paris Agreement through climate change-related metrics or commitments of the issuers to such goals,” the statement added.
The move is the latest in a series of steps by the world’s top central banks to acknowledge their policy must take account of climate change, although some like the US Federal Reserve insist that actually tackling it is the preserve of governments.
The ECB already buys green bonds and holds around a fifth of the green assets that meet its eligibility criteria, which has already prompted a surge in issuance.
Environmental campaigners have been keeping a close eye on the bank’s strategy review, including a protest by Greenpeace, which saw protestors fly onto the ECB building in Frankfurt.
“Today’s news is a victory for the climate justice movement, and the 165,000 people who signed a petition calling for an end to fossil finance and campaigned for over a year to put the climate crisis at the top of the Bank’s agenda,” Julia Krzyszkowska, Europe campaigner at the NGO 350.org.
“The ECB is sending a clear signal: the era of fossil fuel finance is rapidly coming to an end. Now, it’s time for private banks and investors to urgently catch up, and cut their ties with the toxic coal, oil and gas industry,” she added.
But the NGO said the announcement could have been more ambitious, warning the plan could be slow to implement and that technical discussions around it might ultimately lead to loopholes for climate-damaging investments.
“We are happy that months of protesting against fossil finance is paying off but we will keep watching the ECB’s actions,” said Rika von Gierke, an activist at the campaign group Koala Kollektiv.
“Too often we have heard pretty words that mean nothing but greenwash. We will continue to protest until the governing council sets strong and clear rules to drop fossil fuel assets and properly regulates the financial sector against climate chaos,” she said.